Iran-Israel Conflict: Oil Prices Surge as War Enters Fourth Week

Iran Attacks Kuwait Refinery, Israel Strikes Back as Regional Conflict Escalates

The conflict between Iran and Israel intensified Friday, March 20, 2026, with Iran launching attacks on an oil refinery in Kuwait and Israel responding with a strike that killed a spokesman for Iran’s Revolutionary Guard. The escalating hostilities are occurring as the region attempts to observe Eid al-Fitr and the Persian New Year, Nowruz, raising concerns about a prolonged disruption to global energy supplies and broader regional instability. The attacks on Kuwait’s energy infrastructure follow an earlier Israeli strike on Iran’s South Pars gas field, initiating a cycle of retaliation that shows few signs of abating.

A Broadening Campaign of Strikes

Iranian drone attacks sparked fires at Kuwait’s Mina al-Ahmadi refinery, which processes approximately 730,000 barrels of oil per day, according to Kuwait’s national oil company. Several units were shut down though officials reported no casualties. Kuwait’s military stated its air defenses were actively intercepting incoming missile and drone threats. This attack represents part of a wider Iranian campaign targeting Gulf Arab states, launched in response to the Israeli strike on the South Pars gas field – a critical source of natural gas for Iran, supplying around 80 percent of its domestic needs.

The Islamic Revolutionary Guard Corps (IRGC) claimed responsibility for additional strikes, alleging they had also targeted United States forces at the UAE’s al-Dhafra airbase and sites within Israel. Reports also indicate incoming missile and drone threats were detected in the UAE, with Bahrain reporting a warehouse fire caused by “Iranian aggression,” and Saudi Arabia intercepting and destroying over a dozen drones within two hours.

Energy Markets Rattled, Global Supply at Risk

The attacks have sent ripples through global energy markets. The benchmark price of Brent crude oil experienced volatility, easing slightly to $108 after a surge the previous day fueled by fears of a major disruption to world energy supplies. The conflict threatens to significantly impact the flow of crude and petroleum, with current disruptions estimated at around 12 million barrels per day – roughly 12 percent of global demand. Restoring these flows could take months, according to the International Energy Agency.

Qatar, a key supplier of liquefied natural gas (LNG), reported fires at a major LNG facility following Iranian missile attacks, though production had already been halted due to earlier incidents. Damage to the facility could delay Qatar’s ability to resume supplies even after the conflict ends. The Strait of Hormuz, a vital waterway for global oil and gas transport, remains a focal point of concern, with Iran’s control over the strait posing a significant risk to shipping.

Israel Responds, Targets Iranian Official

In response to the Iranian attacks, Israel’s military reported attacking government facilities in Tehran. Iranian state TV confirmed the death of Ali Mohammad Naini, deputy head of public relations for the Islamic Revolutionary Guard Corps, marking one of dozens of leading government and military officials killed in Israeli strikes. Air raid sirens sounded in Tel Aviv and Jerusalem as Israel intercepted incoming Iranian missiles, with reports suggesting some may have carried dispersing cluster bombs.

Diverging Objectives and Uncertain Path Forward

The situation is further complicated by differing objectives between the United States and Israel. US Director of National Intelligence Tulsi Gabbard stated that the Israeli government appears focused on disabling Iranian leadership, while President Trump has stated his goal is to destroy Iran’s ballistic missile capabilities and navy. Israeli Prime Minister Benjamin Netanyahu has claimed Iran is no longer capable of enriching uranium or producing ballistic missiles, assertions that appear to contradict Iran’s continued ability to launch attacks on targets across the Middle East.

The Revolutionary Guards maintain that missile production is ongoing, despite Israeli claims to the contrary. The conflict has already resulted in thousands of deaths and widespread displacement, particularly in Iran and Lebanon, where Israel has targeted the Iranian-backed Hezbollah militia.

What Happens Next?

The immediate future remains highly uncertain. While Prime Minister Netanyahu has pledged to avoid further attacks on Iran’s gas field, the cycle of retaliation appears likely to continue. The US is reportedly considering deploying additional troops to the Middle East, potentially including a presence on Iranian shores or at its Kharg Island oil export hub. President Trump has indicated a willingness to take “whatever is necessary,” but has not ruled out military intervention.

The conflict is also impacting the political landscape, potentially bolstering Netanyahu’s position in Israel while creating challenges for Trump, whose re-election campaign is facing headwinds from rising energy prices and public opposition to the war. The potential for a ground operation remains a concern, and the long-term consequences of the conflict for regional stability and global energy markets are significant.